When developing a successful supply and distribution arrangement, finding the right vendors is part of the process.
By Pat Pape, Contributing Editor
Rutter’s Farm Stores, a 62-store chain based in York, Pa., is currently rebidding the company’s foodservice contract despite the fact that management is completely satisfied with the supplier it uses now.
The regular rebidding of contracts is an accepted part of doing business at Rutter’s.
“The supplier knows we’re bidding the contact,” said Ryan Krebs, director of food service for the c-store chain. “From time to time, you have to look at three or four other food distributors and see what’s out there.”
Convenience store operators who develop and maintain positive relations with their vendors and suppliers, treating them as respected partners, are often at an advantage when the vendor must go the extra mile in a crisis or help promote slow-moving merchandise.
“It’s really important that you go into the relationship with a win-win-win attitude. I call it the triple win,” said Jack Cushman, director of food service for CST Brands Inc., which owns and operates Nice N Easy Grocery Shoppes in New York. “The customer has to win, and the retailer has to win. But often, people don’t realize that the distributor has to win as well.”
When it comes to successfully selecting, marketing and selling merchandise in a convenience outlet, “you’ve got to look at it from their point of view, and they have to look at your point of view,” Cushman said. “Your distributor is your most important relationship. All manufacturers must go through a distributor.”
A key element of every good relationship is communication. That’s true whether the communicators are a husband and wife or a convenience store operator and supplier.
Deli-Boy Inc. of Solvay, N.Y. is the food distributor for the Nice N Easy foodservice program, and since the beginning of that relationship, communication has been important to the organizations’ mutual success. Representatives of both companies schedule a formal meeting with a prepared agenda each month, but they also may talk daily or a few times a week when necessary.
“We may discuss food safety, ways to get better pricing, running a special a little longer or a recall issue,” said Cushman, who also oversees CST Brands’ made-to-order foodservice in San Antonio-based Corner Stores. “There is constant communication about where we stand on promotions, and we try to improve the process and streamline delivery.”
Deli-Boy also provides valuable information to help Nice N Easy manage expenses. Prices frequently fluctuate on foodservice commodities, from meat to produce, so Deli-Boy sends Nice N Easy a weekly price update on every item the stores purchase.
The chain’s technology team has created an Excel application that includes the recipe for each foodservice product on the stores’ menu. The application can quickly determine the chain’s cost for any food item based on the rise or fall of commodity pricing.
“If lettuce goes from $10 a case to $10.50 a case, we can put that information into the data base, and in five minutes we have the change in margins on everything we sell,” said Cushman. “It pays to stay on top of margins.”
Lisa Dell’ Alba, president and CEO of Square One Markets Inc. based in Bethlehem, Pa., is convinced that good communications and understanding are the foundation of good relations.
“Our most successful relationships are with the vendors who have gone out their way to understand our business model and what’s important to us,” she said.
Recently, Dell’ Alba and a vendor’s representative spent an entire day visiting three of the chain’s nine stores.
“We didn’t have much of an agenda,” she said. “I just wanted him to see what the day of a store manager looks like. Sometimes merchandisers come in and are seen as being a little disruptive to the manager’s day. I wanted him to see that on-the-street relationship. Sometimes managers don’t buy in [to a program] because they aren’t being respected from a time standpoint. When someone wants to meet with a manager, they need to make an appointment.”
She also feels that face-to-face meetings and phone conversations with suppliers are preferable to electronic communications whenever possible. “We text and email, but you have to keep that human element,” Dell’ Alba said. “It makes a big difference.”
Store operators have expectations for their suppliers that go beyond fairness, honesty and competitive prices.
“I want my suppliers to keep me updated on trends, and I want to hear about what’s new,” Krebs said. “When a manufacturer has a new product, I want to see it in the development stage, not when my competitor has had it for six months. I’ve had to reset that expectation.”
Ensuring that the store team gets behind new product promotions is the responsibility of management, but proactive vendors can reinforce that effort.
“Our store managers take their cue from me,” Dell’ Alba said. “I find that if I have a good relationship with a key account manager and that key account manager is willing to get in front of our store managers when we have them in for a meeting, it goes a long way. It’s our job to make sure store managers like the product and support the program. If they don’t, they’re not going to take care of it. Our managers need face time with suppliers when they’re not in the middle of their busy day. I think that’s huge.”
Like many retailers, Dell’ Alba has been disappointed by eager vendors who labored to earn her business but dropped the ball after the contract was signed.
“One company worked so hard to get our business, but now it’s impossible to communicate with them,” she said. “This is a problem because our customers love the product and the price point is great.”
It also is irritating when vendors judge Square One Markets by its size instead of its performance. “When I walk around a trade show, the first question anyone asks me is how many stores we have,” Dell’ Alba said. “I try to change that conversation to a volume conversation. My nine stores can technically do more volume than a larger store chain.”
Convenience store operators are aware of their obligations to suppliers, such as paying bills on time, putting everything in writing and making expectations known early in the relationship. But there are unwritten rules for a winning partnership between retailers and suppliers.
“The more of their product that I sell, the better for both of us,” Krebs said. “If it’s not an immediately successful item, I don’t pull the trigger. I try to find ways from a marketing strategy to increase sales.”
That could be a billboard promotion, moving the product to the main screen on Rutter’s foodservice kiosks or pairing the struggling product with one that drives incremental sales.
Retailers are under no obligation to recommend their suppliers to potential clients, but Cushman has found it can boost profits for everyone.
“Deli-Boy is an institutional foodservice provider with a focus on colleges, universities and public schools,” he said. “If I suggest to someone at [nearby] Syracuse University that they may want to buy foods through Deli-Boy, it will drive my price down. We obviously don’t compete with the university, but we can cut prices by bringing in volume amounts.”
As a result, Cushman has been pleased with his chain’s relationship with the distributor.
“I don’t want to use a supplier who is so big that I get lost in the shuffle,” Cushman said. “You’ve got to right-size these things. And then you’ve got to get to know each other and trust each other. That makes communication smoother.”